Bad Economy = Bad CRM?

As an industry analyst who talks to technology vendors for a living, I have lately been hearing abundant and frequent variations on the message “A down economy is good news for us.” Obviously, companies in any industry would like for this somewhat paradoxical statement to be true, and there are some clear examples where specific niches do actually thrive while the rest of the economy falls apart. Have you tried to rent a storage space in cities with plummeting home prices lately? Do you know anyone in the collections business? Both of those businesses boomed in 2008, a somewhat depressing thought if one looks at the underlying reasons.

But do bad economic times make for boom conditions in CRM? I am not referring to sales of CRM applications by technology vendors—I mean the core concept of CRM, the notion that should undergird basic business processes. CRM vendors definitely make the argument that their wares are boom- and bust-proof: In good times, CRM helps attract new customers; in poor economic conditions, CRM can dramatically assist in the all-important customer-retention efforts that help companies survive dry periods. But that message has clear self-serving intentions. Even if it proves true, the sales of technology do not accurately reflect enterprises’ level of customer centricity. So what’s the reality?

Before the economy really seemed to hit the skids, companies began to increasingly talk up the concepts of customer experience, customer intimacy, and personalization of service. In many organizations, those messages were popping out of the mouths of C-level executives, a somewhat startling change from the past. While it could be argued that this was just a superficial change—a token and patronizing “Year of the Customer,” as it were—the changes did seem to go deeper.

New director or C-level positions were popping up with a mandate to incorporate concern for “The Customer” into processes and decisions, for example. Those changes seemed to portend a new era, where the voice of the customer (another favorite buzzword of late 2007 and early 2008) would be not only heard, but integrated into key processes, such as product and service design, marketing approaches, and sales channels.

Now, call me a pessimist—go ahead, I’ll wait—but I’m nowhere near convinced that these messages had sufficient time to worm their way deep enough into many companies’ DNA that they’ll survive serious economic turmoil. When economic conditions get dire, companies tend to turn inwardly focused like a turtle retracting its head into its safe and cozy shell. This means looking for ways to survive, including the ever-popular cost-cutting and “focusing on core competencies,” which all too often do not include relationships with customers.

This may impact the sales and marketing units, but will probably manifest itself most directly in the realm of customer service and support. Firms will likely look to reduce the use of expensive live agents in contact centers, preferring some hastily deployed self-service options instead.

Although I have long made the argument that self-service can actually be a boon to customer satisfaction, it takes careful consideration to create such a positive outcome. In some cases, enterprises may not have enough time to create a coherent and deliberate plan for shifting the optimal segments of their customer service to self-service channels, or to even determine what the most appropriate self-service channels are.

In other cases, the opportunity to improve the customer experience will succumb to the expediency of falling back to familiar ways of doing things.

Gethuman—the organization born out of the ashes of too many poorly deployed phone self-service systems—has fallen off the radar screens of the mainstream media in the past two years. (See “Gethuman? Get Real,” Customer Centricity, March 2007.) In the coming months, you should expect a return to prominence for Gethuman, or some new organization created to help focus consumer wrath born of poor service. I certainly do.

Ian Jacobs (ijacobs@datamonitor.com) is a senior analyst at Datamonitor.

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